Saturday, September 24, 2011

No you're right, banks do play a vital role. My large point is what percentage of your economy is derived from a service that really is a supporting one. In otherwords, say back in the day it took 2% of your economy to be financial services to support the remaining 98%. Now, it magically costs 5%? Admitted, some of that is from banks with overseas revenues and operations, but when you consider I we would call it "non-GDP supporting" income (fee's, arbitrage, shoddy mortgage services, etc). there is a bubble.

Bankers do produce things, as services count as goods in the economy. The GDP consists of both the goods and services of the economy. Bankers may for the most part be a bunch of corrupt SOBs, but one of the major misconceptions about financiers overall, one that goes back centuries, is that they are just leeches on the system, that they just "move money around," but don't really contribute anything of value to the economy. This is not true. They provide very valuable services to the economy, providing specialized knowledge, and without them, the economy would not be able to function.

Only if you throw in say WWII and supply all the allies with armaments, ration goods over here so that people save and even try and win the war. Oh, and sell war bonds too. Plus rebuild the nations we conquered and use the leverage we had to ensure that industry here supplied it.

Did the banks finance that war or did the citizens do it via how many bond drives?

Think of General Motors as a perfect example. Once a great company that made money from producing and selling cars. Then they became a bank, that happens to offers cars as part of their service. GM lost money selling cars, but made a profit from their GMAC banking business. That it not a very good business model.The GM story reflects the entire US economy. Once a great nation that produced things, now financial services are a huge part of the economy.